PRECIOUS-Gold holds near 3-week top as yuan devaluation hits equities

Reuters Staff

2 Min Read

MANILA, Aug 12 (Reuters) - Gold gained for a fifth session in a row on Wednesday to trade near a three-week high, benefiting from weaker equities after China’s devaluation of its currency stoked fears of a forex war.

FUNDAMENTALS

* Spot gold was up 0.1 percent at $1,109.85 an ounce by 0041 GMT, after peaking at $1,119 on Tuesday, its highest since July 20.

* U.S. gold for December delivery gained 0.2 percent to $1,109.50 an ounce.

* China’s surprising 2 percent devaluation of the yuan, seen as a move to bolster a flagging economy, was condemned by U.S. lawmakers as a grab for an unfair export advantage.

* The move hit global equities, prompting some investors to seek safe-haven assets such as gold which has now recovered around 3 percent from a 5-1/2-year low of $1,077 hit in a late July rout.

* But China’s currency devaluation is unlikely to distract the U.S. Federal Reserve from a domestic economy that appears increasingly ready for higher interest rates, according to economists and Fed watchers.

* That could limit gold’s upside potential. A looming hike in U.S. interest rates had weighed on non-interest yielding bullion.

* U.S. gold jewellery imports rose in the second quarter at the slowest rate in nearly three years, Thomson Reuters GFMS calculations showed, while imports of silver jewellery notched their biggest jump in more than a year.

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MARKET NEWS

* The dollar was trading not far from a two-month peak against the yen scaled after China devalued its yuan.

* U.S. oil prices edged up from six-year lows after China’s currency move underscored fears over its economic health and OPEC production hit multi-year highs.